Provincial carbon compensation mechanism in China based on the “revenue and expenditure-responsibility and benefit” dual balance perspective

Abstract

[Objective] In order to actively and steadily promote the dual carbon goals and effectively solve the problem of carbon inequity in various provinces, it is important to build a complete, reasonable, and easy-to-implement provincial carbon compensation mechanism. [Methods] Based on the IPCC inventory method, the inter-regional bilateral carbon transfer calculation model, and the row arrange series (RAS) method, this study incorporated the relationship between carbon sources and carbon sinks within the region (reflecting the differences between natural and production factors) and the carbon transfer of cross-regional trade (reflecting the differences between economic and consumption factors) into a unified carbon compensation framework, introduced the “revenue and expenditure-responsibility and benefit” dual balance perspective, constructed a inter-provincial carbon compensation framework of compensation basis, compensation subject, compensation standard, and compensation method, and explored the pathways of provincial carbon compensation that effectively integrate with the dual carbon goals and their carbon reduction mechanisms. [Results] The results show that: (1) Compared with the previous perspectives (“revenue and expenditure” perspective and “responsibility and benefit” perspective), the provinces that bear more embodied carbon emissions from trade, being carbon sinks, and have less carbon emissions within the region, receive more compensation using the “revenue and expenditure-responsibility and benefit” dual balance perspective. (2) Quota compensation schemes based on comprehensive principles are more suitable for inclusion in the fairness-oriented carbon compensation mechanism than those that prioritize fairness or efficiency separately. (3) During the “historical compensation period” (2012-2021), Guangdong, Zhejiang, Beijing, and Chongqing were the four provinces with the largest compensation amounts, and Inner Mongolia, Hebei, Xinjiang, Heilongjiang, and Shanxi were the five provinces with the largest compensated amounts. (4) During the “future compensation period” (2022-2030), Inner Mongolia, Hebei, and Shanxi with greater carbon emission reduction potential will have carbon quota deficits, and Guangdong, Fujian, Tianjin, and Shanghai with high economic benefits per unit of carbon emissions will have carbon quota surpluses. [Conclusion] The carbon compensation mechanism proposed in this paper based on the dual balance perspective of “revenue and expenditure responsibility benefit” is more fair and operable, and can serve as an important reference for the policy design of China’s provincial carbon compensation mechanism. The comprehensive supporting system of the carbon compensation mechanism can be improved and pilot work can be carried out.

Keywords

• carbon compensation mechanism|multi-regional input-output table|dual carbon goals|ipcc inventory approach|ras method